Jim McCammon

1
Determining Penalties for Hazardous Waste
Violations

• Jim McCammon
• DTSC
• February 15, 2007

2
HSC, Section 25404.1.1(a)

• Authorizes UPAs to issue administrative orders
  and assess penalties for violations of Health and
  Safety Code Chapter 6.5, 6.7, and 6.95.
• Only Chapter 6.5, hazardous waste, has an
  established matrix with dollar values

3
HSC, Section 25404.1.1(b) considerations for
calculating a penalty

• Nature, circumstances, extent gravity of
  violation.
• Violators efforts to prevent, abate, or clean up
  conditions posing a threat to public health or
  the environment.
• Violators ability to pay.
• Prophylactic effect of the penalty.

4
Assessment of Administrative Penalties-overview

• Section 666272.60
• Applies to violations of HSC Chapter 6.5.
  hazardous waste.
• Does not apply to corrected Minor Violations, as
  defined by HSC 25117.6(a).
• Penalties must be consistent with other penalties
  issued for the same violations.

5
Assessment of Administrative Penalties-overview

• Section 66272.61
• The penalty shall not exceed the statutory
  maximum.
• (The statutory maximum is established by HSC
  25189 and 25198.2. It is 25,000 per violation
  per day.)

6
Assessment of Administrative Penalties-overview

• Section 66272.62--Determining the Initial
  Penalty
• Potential for Harm
• Extent of Deviation
• Determination of Initial Penalty Matrix.

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Assessment of Administrative Penalties-overview

• Section 66272.63--Initial penalty adjustment
• Intent
• Economic Benefit
• Statutory Maximum

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Assessment of Administrative Penalties-overview

• Section 66272.64--Multiple Violations
• A single initial penalty may be assessed for
  multiple violations, if
• Violations of the same requirement at one or more
  locations at the same time.
• Violations of the same requirement at different
  times, unless facility has been notified and had
  time to correct violation.

9
Assessment of Administrative Penalties-overview

• Section 66272.64 (continued)
• Violations are not independent or are not
  substantially distinguishable
• Where there is economic benefit to be recovered,
  violations shall be cited separately.

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Assessment of Administrative Penalties-overview

• Section 66272.65--Multiday Violations.
• Continuous violations, not intermittent
• Penalty for first day calculated per 66272.62
• Remaining days 2 of first day penalty.

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Assessment of Administrative Penalties-overview

• Section 66272.66--Minor Penalties
• Where Minor Penalties are subject to penalties,
  they shall be calculated according to this
  Article.
• Failure to comply with Notice to Comply
• Agency determines that enforcement and penalty is
  warranted.

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Minor Violations

• Class II violations HSC 25117.6
• Not knowing, willful, or intentional
• No economic benefit to violator
• Not chronic, or committed by recalcitrant
  violator
• No enforcement 25187.8
• Minor violation corrected at time of inspection
• Minor violation corrected within time provided by
  Notice to Comply
• Agency may determine that circumstances warrant
  assessment of a civil penalty 25187.8(g)(2)

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Assessment of Administrative Penalties-overview

• Section 66272.67--Base Penalty
• The base penalty is the penalty determined for
  each violation by sections 66272.62-66272.66.
• The total base penalty is the sum of all the base
  penalties for all violations

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Assessment of Administrative Penalties-overview

• Section 66272.68--Adjustments to the Total Base
  Penalty
• Cooperation
• Prophylactic Effect
• Compliance History
• Ability to Pay

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Assessment of Administrative Penalties-overview

• Section 66272.69--Final Penalty
• The final penalty consists of the total base
  penalty . . . with any adjustments made pursuant
  to . . . Section 66272.68.
• The final penalty shall not exceed the statutory
  maximum.

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Citation Violation Potential for Harm Extent of Deviation of Times Violation Occurred Statutory Maximum Initial Penalty Intent Factor Base Penalty Additional Amounts for Multiday Violations Economic Benefit
1
2
3
4
5
6
7
8
9
TOTAL
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Worksheet, Step 1

• Assign a number for each violation
• Regulatory or Statutory Section
• Write a brief description of the violation
• Nature and amount of waste
• Conditions and circumstances of violation

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Worksheet, Step 1citation, description of
violation
Citation Violation
1 T22, CCR 66264.176 Respondent stored three drums of ignitable wastes within 50 feet of the property line
2 T22, CCR 66264.177(c) Failure to separate incompatibles, waste acid stored with cyanide
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Worksheet, Step 2

• Potential for Harm
• Major the characteristics and amounts of waste
  present a major threat and the circumstances
  indicate a high potential for harm.
• Moderate the characteristics and amount are not
  a major threat or the circumstances do not
  present a high potential for harm.
• Minimal the threat presented by the
  characteristic and amount of waste, and by the
  circumstances of the violation is low.

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Potential for Harm Factors

• The characteristics of the substance.
• The amount of the substance.
• The extent to which human life or health is
  threatened.
• The extent which animal life is threatened.
• The extent to which the environment is threatened.

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Something to Note

• Record keeping violations do not have a major
  potential for harm. Record keeping means only
  the requirement to record, retain, and make
  available, records see 66272.62(b)(5)
• Failure to have required plans, such as waste
  analysis plans, or to use manifests, is not a
  record keeping violation.

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Worksheet, Step 2potential for harm
Violation Potential for Harm
Respondent stored three drums of ignitable wastes within 50 feet of the property line Moderate drums in good condition, no fuel or sources of ignition nearby.
Failure to separate incompatibles, waste acid stored with cyanide Major potential threat from mixing cyanide and acid very high, employees at risk.
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Worksheet, Step 3

• Extent of Deviation
• Major requirement is completely ignored, or the
  function of requirement is rendered ineffective
• Moderate requirement functions to some extent,
  but not all important provisions are met.
• Minimal requirement functions nearly as
  intended, but not as well as if all provisions
  were met.

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Extent of Deviation Factors

• For requirements with more than one part,
  consider the extent of violation in terms of the
  more significant requirement.
• For a single requirement, the range of potential
  deviation may vary. For example
• Major failure to have a contingency plan
• Moderate significant elements of plan are
  missing
• Minimal one or two minor elements missing

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Worksheet, Step 3extent of deviation
Violation Extent of Deviation
Respondent stored three drums of ignitable wastes within 50 feet of the property line Moderate Three drums out of 15 in storage area stored improperly.
Failure to separate incompatibles, waste acid stored with cyanide Major Requirement to separate incompatibles completely ignored.
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Worksheet, Step 4statutory maximum
Violation of Times Violation Occurred Statutory Maximum
Respondent stored three drums of ignitable wastes within 50 feet of the property line one 25,000
Failure to separate incompatibles, waste acid stored with cyanide one 25,000
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Statutory Maximum

• Based on HSC sec. 25189 and 25189.2.
• . . . shall be liable for a civil penalty not to
  exceed twenty-five thousand dollars (25,000) for
  each separate violation or, for continuing
  violations, for each day that violation
  continues.

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Initial Penalty Matrix66272.62(d)
Extent of Deviation Potential for Harm Potential for Harm Potential for Harm
Extent of Deviation Major Moderate Minimal
Major 25,000 (22,000) 20,000 20,000 (17,500) 15,000 15,000 (10,500) 6,000
Moderate 20,000 (17,500) 15,000 15,000 (10,500) 6,000 6,000 (4,000) 2,000
Minimal 15,000 (10,500) 6,000 6,000 (4,000) 2,000 2,000 (1,000) 0
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Worksheet, Step 5initial penalty
Violation Potential for Harm Extent of Deviation Initial Penalty
Respondent stored three drums of ignitable wastes within 50 feet of the property line Moderate drums in good condition, no fuel or sources of ignition nearby. Moderate Three drums out of 15 in storage area stored improperly 10,500
Failure to separate incompatibles, waste acid stored with cyanide Major potential threat from mixing cyanide and acid very high, employees at risk. Major Requirement to separate incompatibles completely ignored. 22,500
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Adjustments to Initial Penalty

• Intent
• Economic Benefit
• Adjustments to Initial Penalty must not exceed
  the Statutory Maximum.

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Adjustment for Intent
Adjustment factors for Violators Intent Adjustment factors for Violators Intent
Adjustment Factor Circumstance
Downward Adjustment of 100 percent Violation was completely beyond the control of the violator
Downward adjustment of 0 to 50 Violations occurred despite good faith efforts to comply with regulations
No adjustment Violation included neither good faith efforts nor intentional failure to comply
Upward adjustment of 50 to 100 percent Violation was a result of intentional failure to comply
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Worksheet, Step 6adjustment for intent
Violation Intent Factor
Respondent stored three drums of ignitable wastes within 50 feet of the property line 1
Failure to separate incompatibles, waste acid stored with cyanide 1
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Adjustments for Economic Benefit

• Increase the initial penalty by the amount of
  economic benefit gained.
• Includes
• - Avoided costs.
• - Delayed costs.
• - Increased profits.
• - Avoided interest.

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Simple Penalty CalculationTotal Base Penalty
Potential for Harm Extent of Deviation No. of times violation occurred Statutory Maximum Initial Penalty Intent Factor Base Penalty Multiday amounts Economic Benefit
1 Moderate Moderate 1 25,000 10,500 1 10,500 n/a None
2 Major Major 1 25,000 22,500 1 22,500 n/a None
Total Total Total Total Total Total Total 33,000 0
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Adjustments to Total Base Penalty

• Cooperation
• Prophylactic Effect
• Compliance History
• Ability to Pay

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Adjustment for Cooperation
Degree of Cooperation Adjustment Factor Circumstance
Extraordinary Downward adjustment of up to 25 percent Violator exceeded minimum requirements in returning to compliance or returned to compliance faster than requested.
Good Faith No adjustment Violator demonstrated a cooperative effort.
Recalcitrance Upward adjustment of up to 25 percent Violator failed to cooperate, delayed compliance, created unnecessary obstacles to achieving compliance, or the compliance submittal failed to meet requirements.
Refusal (This does not include refusal to allow inspections.) Upward adjustment of 50 to 100 percent Violator intentionally failed to return to compliance or to allow clean-up operations to take place.
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Adjustments to the Base Penaltycooperation
Cooperation Prophylactic Effect Compliance History Ability to Pay
Respondent returned to compliance faster than requested
Adjustment - 25 Adjustment Adjustment Adjustment
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Adjustment for Prophylactic Effect

• The total base penalty may be adjusted upward or
  downward to ensure that the penalty is sufficient
  to provide a prophylactic effect on both the
  violator and the regulated community as a whole.
• prophylactic 2 tending to prevent or ward
  off preventative.

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Adjustments to the Base Penaltyprophylactic
effect
Cooperation Prophylactic Effect Compliance History Ability to Pay
Respondent returned to compliance faster than requested none
Adjustment - 25 Adjustment 0 Adjustment Adjustment
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Adjustment for Compliance History

• Reduction of 5 for previous inspections without
  violations up to 10.
• 15 reduction for current ISO 14001 certificate.
• Increase for violations in past 5 years up to
  100
• Violations at same site receive more weight
• Recent violations receive more weight
• Same or similar violations receive more weight

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Adjustments to the Base Penaltycompliance history
Cooperation Prophylactic Effect Compliance History Ability to Pay
Respondent returned to compliance faster than requested none Inspection in 2004 found no violations
Adjustment - 25 Adjustment 0 Adjustment -5 Adjustment
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Adjustment for Ability to Pay

• Payment may be extended
• Penalty may be reduced
• No adjustment for ability to pay if
• Upward adjustment for failure to cooperate
• Upward adjustment for compliance history.
• Note Usually adequate financial information to
  make an ability to pay determination is not
  available at the time an administrative order is
  prepared.

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Adjustments to the Base Penaltyability to pay
Cooperation Prophylactic Effect Compliance History Ability to Pay
Respondent returned to compliance faster than requested none Inspection in 2004 found no violations No information available
Adjustment - 25 -8,250 Adjustment 0 Adjustment -5 -1,650 Adjustment 0
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Final Penalty

• Total Base Penalty 33,000
• /- Adjustments for
• Cooperation -8,250
• Prophylactic Effect 0
• Compliance History -1,650
• Ability to Pay 0
• Economic Benefit 0
• Final Penalty 26,400

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Multiple Violations

• A single initial penalty may be assessed for
• multiple violations when
• - The facility has violated the same requirement
  in different location (e.g., units) within the
  facility.
• - The facility has violated the same requirement
  on different days, unless the facility has been
  notified of the violation and has had sufficient
  time to correct the violation.
• - Violations that are not independent or are not
  substantially distinguishable.

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Multiple ViolationsViolations not independent
Violation Potential for Harm Extent of Deviation Number of days violation occurred Statutory Maximum
Failure to train employees who manage hazardous waste Moderate Waste is not highly hazardous or mobile, is properly labeled and containerized, is produced at a relatively low rate (about 2 drums/month) Major Requirement has been completely ignored for 2 years At least one employee 25,000
Failure to provide annual reviews of training, at least 3 employees Moderate Waste is not highly hazardous or mobile, is properly labeled and containerized, is produced at a relatively low rate (about 2 drums/month) Major Requirement has been completely ignored for 2 years At least two annual trainings for 3 employees 6 x 25,000 150,000
Failure to maintain training records Moderate Waste is not highly hazardous or mobile, is properly labeled and containerized, is produced at a relatively low rate (about 2 drums/month) Major Requirement has been completely ignored for 2 years 1 25,000
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Multiple ViolationsViolations not independent
Initial Penalty Intent Factor Base Penalty
17,500 1.5 26,250
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Multiple ViolationsViolations occurring at
different times
Violation Potential for Harm Extent of Deviation Number of days violation occurred Statutory Maximum
Transporting hazardous waste without registration 9/14/05, 1/9/06, 7/1/06 Moderate Waste not highly hazardous, not very mobile, moderate amounts transporter did not have hazardous waste insurance. Major Requirement to use registered hauler completely ignored 3 days 75,000
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Multiple ViolationsViolations occurring at
different times
Initial Penalty Intent Factor Base Penalty
17,500 1.5 26,250
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Multiday Violations

• The initial penalty for the first day of
  violation shall be determined as provided in
  Sections 66272.62 and 66272.63.
• Multiply the initial penalty by 2
• Then multiply by the number of days (less the
  first day)
• Add this number to the initial penalty

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Multiday Violations
Violation Potential for Harm Extent of Deviation Number of Days Statutory Maximum Initial Penalty
Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn Major Major 570 days 9/21/04-4/14/06 14,250,000 22,500
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Multiday ViolationsOne approach
Violation Initial Penalty Base Penalty Additional Amounts for Multiday Violations
Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn 22,500 278,550 22,500 x .02 450 450 x 569 days 256,050
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Multiday ViolationsAn alternative approach
Violation Initial Penalty Base Penalty Additional Amounts for Multiday Violations
Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn 22,500 152,930 9/04-1/06, gt6 drums, Min/Maj. 121 days. 4000 x .02 80. 80 x 121 days 9680 1/06-12/06, 6-15 drums, Mod/Maj. 345 days. 17,500 x .02 350. 350 x 345 120,750 12/06-4/06. 16-23 drums, Maj/Maj 104 days. 22,500 x .02 450. 450 x 104 days 46,800 Total 130,430
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Calculating overlapping violation days
Jan.--- (200 days) ---June May---(99 days)---Aug. July---(135 days)---Nov.

• Days in continuous violation
• Total violation time 330 days.
• (Not 200 99 134 433 days.)

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Adjustments for Economic Benefit

• Increase the initial penalty by the amount of
  economic benefit gained.
• Includes
• - Avoided costs.
• - Delayed costs.
• - Increased profits.
• - Avoided interest.
• DTSC policy Guidelines for Calculating the
  Economic Benefit of Noncompliance at
  http//www.dtsc.ca.gov/LawsRegsPolicies
  /Policies/HazardousWaste/upload/HWMP_GuidanceDocum
  ent_EconomicBenefitNoncompliance.pdf

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Economic Benefit

• Avoided costs. Includes
• Disposal costs for wastes illegally disposed of
• Cost of insurance
• Salaries for staff not hired
• Failure to conduct testing or monitoring
• Failure to use registered hauler
• Failure to install equipment on units
  subsequently closed (e,g., containment,
  monitoring)
• Avoided fees (for entities that operated
  regularly as hazardous waste facilities)

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Economic Benefit

• The economic benefit of avoided costs is the
  total cost plus interest.

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Economic Benefit

• Delayed costs, includes
• Unfunded or underfunded closure cost mechanisms
• Delayed disposal or treatment costs
• Failure to install equipment that will have to be
  installed eventually.
• The economic benefit of delayed costs is the
  interest on the amount during the period the
  costs were not paid.

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Economic Benefit

• Increased Profits. Includes
• Additional volumes of waste handled
• Additional types of waste received
• Other additional business (e.g., offering to pick
  up hazardous waste as a benefit to customers
  paying for non-hazardous waste pick-up)

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Economic Benefit

• Avoided Interest (applies to both delayed costs
  and avoided costs)
• Violator receives interest on money that should
  have been spent on compliance
• Violator does not have to pay interest on money
  that would have had to be borrowed to achieve
  compliance
• Violator makes a profit, by reinvesting it, on
  money that should have been spent on compliance

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Economic Benefit (examples)
Violation Economic Benefit
Failure to train employees who manage hazardous waste (facility manager) Training (California Compliance School) 530 3 days salary 480 Total 1010
Failure to provide annual reviews of training, at least 3 employees, two years 3 staff x 4 hours x 25/hr 300/yr Total for 2 years 600
Failure to maintain training records Negligible
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Economic Benefit (examples)
Violation Economic Benefit
Using an unregistered hauler to transport hazardous waste 9/14/05, 1/906, 7/1/06 3 trips _at_ 700/trip 2100
Storage without authorization 23 drums of waste etchant with 210,000 ppm Cu, 143,000 ppm Pb, 25,000 ppm Zn Avoided costs of missed shipment dates 9/04,12/04, 3/05, 6/05, 9/05, 12/05, 3/05 7 shipments x 700 4900 Delayed costs of disposal 23 drums _at_ 400 each 9200. 9200 _at_ 5/yr 460. Total 4900 460 5,360
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Total Base Penalty
Violation Harm Deviation Stat. Max. Base Penalty Multi-Day Penalty Economic Benefit
1-3 Training Mod. Major 200K 26,250 n/a 1,610
4 Storage Major Major 14.25M 152,930 130,430 2,100
5 Trans-porting w/o registra-tion Mod Major 75K 26,250 n/a 5,360
Total Total Total Total Total 205,430 9,070
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Final Penalty

• The final penalty consists of the total base
  penalty with any adjustments made.
• Base penalty 205,430 Economic Benefit 9,070
  Final Penalty 214,500

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Problems and Issues

• Statutory Maximum/Base Penalty.
• Statutory Maximum refers only to the penalties
  for individual violations. Adjustments to the
  base penalty cannot raise the individual
  penalties above their statutory maxima.
• Where this may be an issue, it is better to
  adjust each penalty separately, rather than
  calculate a Total Base Penalty.

66
Problems and Issues

• Economic Benefit
• Economic Benefit is calculated as a discrete
  amount.
• Adding Economic Benefit to the Initial Penalty
  causes it to increase by 2 for each day of
  continuous violation.
• Adjustments to Base Penalty will increase
  Economic Benefit amount.
• Best practice is to total the Economic Benefit
  separately and add it, with the other
  adjustments, at the end.